Disorders of body mass regulation such as obesity are increasingly common causes of morbidity and mortality. Despite significant progress, many cellular and molecular details of energy homeostasis remain unknown. Increased understanding of the molecular signaling mechanisms will aid in the development of more effective therapies for obesity and its associated disorders, such as type 2 diabetes. Protein tyrosine phosphorylation and dephosphorylation is a fundamental signaling mechanism in cells, and is tightly controlled by the opposing actions of protein-tyrosine kinases and protein-tyrosine phosphatases (PTPs). Protein-tyrosine phophatase 1B (PTP1B) is an important physiological regulator of metabolism. PTP1B whole-body knockout (KO) mice are hypersensitive to insulin and leptin, and are resistant to high fat diet-induced obesity. Additional studies using tissue-specific deletion, revealed a diverse and complex function of PTP1B in various peripheral insulin-responsive tissues (liver and muscle) and brain. However, the metabolic role of adipose PTP1B remains largely unexplored. To fully assess the physiological role of adipose PTP1B, we will employ three complementary approaches. We will generate adipose-specific PTP1B KO mice which will enable assessment of consequences of PTP1B loss in adipose tissue in vivo. Equally important are the dissection of molecular mechanisms mediating PTP1B function, and characterization of the dynamic PTP1B-substrate(s) interaction with high spatial and temporal resolution. In preliminary studies, we show that: (i) mice with adipose-PTP1B deletion are resistant to high fat diet-induced obesity, (ii) this is a result, at least in part, of increased energy expenditure in these mice. (iii) In addition, adipose PTP1B deletion improves systemic insulin sensitivity and glucose homeostasis. (iv) Indentify pyruvate kinase M2 as a novel substrate of PTP1B. Thus, our preliminary studies indicate that adipose PTP1B is a major regulator of body mass and glucose homeostasis. The broad goals of this proposal are to investigate the metabolic role of adipose PTP1B. PTP1B is an attractive target for therapy of obesity and diabetes with many pharmaceutical companies developing PTP1B inhibitors. Therefore, understanding how adipose PTP1B acts is vital for its evaluation of use as a target for therapeutic intervention.